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Question 122: "Corporation A" has proposed that each of its top salespeople create an LLC of his or her own, with which the corporation will contract. Each salesperson will be the sole owner of his or her LLC. The corporation hopes to eliminate these individuals as employees and deal with the LLCs on an independent contractor basis. Will that work to keep them out of the corporation's retirement plan? Will the corporation have to pay payroll taxes for these workers? |
Answer: If the salespeople are employees now (and it sounds like they are), simply putting in an LLC will not change anything at all for federal tax or pension purposes. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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